LOS ANGELES – A certified public accountant who was the business manager for singer-songwriter Alanis Morissette, as well as other well-known entertainment and sports figures, was sentenced today to six years in federal prison for stealing approximately $7.2 million from his clients.
Jonathan Todd Schwartz, 48, a Westlake Village resident who was living in Agoura Hills at the time of the criminal conduct, was sentenced this evening by United States District Judge Dolly M. Gee.
The sentencing follows Schwartz’s guilty pleas in February to wire fraud and tax fraud charges.
Schwartz was a member of GSO Business Management, LLC, a business management firm based in Sherman Oaks that provides financial guidance to high-net worth clients. Schwartz admitted in court that he stole his clients’ money and falsified account records to conceal the embezzlement.
Judge Gee described Schwartz’s crimes as “insidious” and “audacious,” noting that they caused “grave economic and psychological harm” to Schwartz’s victims, whose lives were “upended by the financial turmoil [he] caused.”
Schwartz admitted that between May 2010 and January 2014, he withdrew approximately $4.8 million belonging to Ms. Morissette without her knowledge or authorization. Schwartz further admitted that he falsely labeled the unauthorized cash withdrawals as “sundry/personal expenses” on the accounting records GSO maintained for Morissette. When confronted about the missing funds, Schwartz stated that the money was an investment in illegal marijuana “grow” businesses, a statement that Schwartz later admitted was false.
In court today, Ms. Morissette told Judge Gee that Schwartz had stolen from her in a “long, drawn-out, calculated and sinister manner.” Ms. Morissette said Schwartz not only took from nearly $5 million in cash from her, but he also stole her dreams for a time when she would be able to focus on her family and the causes that are important to her.
Because of his position as a business manager, Schwartz had access to his clients’ bank accounts so he could pay their bills and obtain cash for them. As part of embezzlement scheme, Schwartz submitted cash-withdrawal requests to banks that were not authorized by his clients, and he either had the cash delivered to him or he picked up the money himself. Schwartz was able to conceal the embezzlements because the bank statements were sent to GSO, and not to the clients. GSO prepared monthly statements for the clients based on a ledger of expenses that GSO bookkeepers maintained, and those statements were false because Schwartz had provided false information to the bookkeepers and caused other pertinent information to be deleted from the monthly statements.
“This defendant abused his clients’ trust by stealing from them, causing significant harm not only to these clients, but the firm which employed him,” said Acting United States Attorney Sandra R. Brown. “Embezzlers think that, by virtue of their positions of trust, they can alter financial records to hide their crimes. This case demonstrates that they are wrong.”
In addition to the nearly $5 million stolen from Ms. Morissette, Schwartz admitted that he embezzled more than $1 million from another client and attempted to conceal the theft by claiming the cash withdrawals were used for renovations to the client’s home. Schwartz further admitted that he embezzled $737,500 from another client and forged that client’s signature on at least two cash receipts.
“Mr. Schwartz used his clients’ funds as a personal ATM machine and, in doing so, financially victimized his clients and colleagues,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Individuals have a right to feel secure when placing their trust, as well as large sums of money, with financial managers, and the FBI will continue to do its part by holding accountable those who violate that trust and break the law.”
Schwartz pleaded guilty to filing a false tax return for the year 2012 and admitted that he failed to report nearly $1 million in income that year. But Schwartz also admitted in court that he did not report any of the approximately $7.2 million he obtained through his embezzlement scheme to the IRS. As a result of the entire scheme, Schwartz acknowledges that he owes the IRS more than $1.7 million in federal income taxes.
“Mr. Schwartz abused the trust placed in him as a CPA and Hollywood business manager in order to line his own pockets,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “As today’s sentence shows, no matter what the source of income, all income is taxable – including money you steal from your employer and clients to fund a lavish lifestyle.”
In addition to the six-year prison term, which will be followed by three years of supervised release, Judge Gee ordered Schwartz to pay $8,657,268 in restitution.
This case was investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. GSO Business Management, LLC fully cooperated during the investigation. The GSO clients who were victimized as a result of Schwartz’s conduct have been reimbursed through payments made by insurance carriers and the company itself.